Insurance 2.0 : Googlelization of the Insurance Industry

When I got to know that there was a suggestion at the Gartner symposium that google is the next big entrant insurance carriers should be scared off, the first though that came to my mind was - Balooney - why would google enter a totally unrelated business which has no leverage from its existing business - at best I though they could come out with insurance products for the cloud computing space - i.e data security insurance , open source indemnification(which is really an insurance business).

It was not until I was relaxing for about half an hour in my hot water tub that I realized - Why not?.

What is Google's greatest asset? I would argue that it is - They know their customer too well. By knowing there customer I do not mean the traditional meaning implied by having a CRM some excellent relationship managers etc. What I really mean is having the ability the drill down to each individual customer and knowing what is going on in customers life- what is on his mind(google search) , what kind of news is he reading(google news) , what does the customer watch(youtube), where does he generally travel and at what speeds does he travel (google Android) , What kind of friends he has (open social) etc.

Next question. If you ask an Insurance executive what is the key differentiator for an insurance company? You will probably hear - Underwriting and Rating. And what makes better underwriting and rating - Knowing your customer very well. How many miles does he travels to work everyday. DMV records , Credit history , Claim history ,Demographic information and a whole bunch of other factors- most of it available as Pay for use data by data vendors like DNB, Choicepoint etc.

So needless to say that there is a clear leverage google has from its existing business to the insurance space. and getting into this space will further strengthen its dataset on each customer as it will get a different aspect of data on the customer.

What has been missing in the underwriting equation in today's insurance companies is knowing about an individual more than the bucket (category) he belongs to. i.e Per Customer underwriting and more predictive modeling based capability as compared to historical statistical analysis of categories. i.e would you be more willing to underwrite a type-a profile (no-accidents , no-claims in the past) but who has recently been searching on - "How to get a gun" and has been generally out of house between 11.00 PM and 4.00 AM (known via Google android) to someone with maybe one accident in the past one year. In todays model of underwriting the second example will be deemed as riskier which is probably not right.

Irrespective of whether google enters insurance or not I do feel that the next generation insurance company (Insurance 2.0) will have to be a Web2.0 company - that harnesses every interaction of an individual in the digital world (Searches , Movement - via android like technology , Relationships-via social networking ) to better its underwriting and rating capability and choose a better risk.